New index to track housing attitudes

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The FHA 203k loan program provides home buyers the opportunity to buy and fix up a property, without exhausting their personal savings.

Fannie Mae announced Tuesday the recently launched Home Purchase Sentiment Index, a proprietary system that could better help originators forecast – and adapt to – real estate market conditions.

“The Fannie Mae Home Purchase Sentiment Index provides the market a single number to track consumer attitudes focused on the housing market,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in an official release. “Utilizing our National Housing Survey, the only consumer sentiment survey of its kind focused on housing, the HPSI will offer insights regarding current and future-looking housing market outcomes and will complement existing data sources to inform housing-related analysis.”

The information gleaned by industry players will prepare them for fluctuations in the market, as the index provides a glimpse of how potential buyers view the health of the market – a major indicator of general willingness to purchase homes.

The index uses information collected through the consumer-focused National Housing Survey and now distills it in an easier-to-understand format.
The latest index shows sentiment fell 0.5 points to 80.8. However, that mark is up 5.3 points year-over-year.

“Consumer attitudes toward the current home selling climate have slid back to their April 2015 level, contributing to a slight decline in the August HPSI reading relative to its four-year high, reached two months ago,” Duncan said. “Expectations of rising mortgage rates and increasing concerns in the last six months about the direction of the economy seem to be weighing on consumers’ assessment of the housing market.”

Highlights from the first survey include:

The percent of respondents who said that it is a good time to buy a house rose to 63%, rising two percentage points from last month’s all-time survey low.

Those who say it is a good time to sell rose two percentage points to 47%. The percent of respondents who say it is a bad time to sell also increased to 44%.

The percent of respondents who said that home prices will go up over the next 12 months fell to 47%. The percent who said that home prices will go down rose to 9%.

The share who expect mortgage interest rates to go up in the next 12 months rose three percentage points to 54%. The share who say mortgage rates will go down remained the same at 5%.

The share of respondents who say they are not concerned with losing their job rose to 83%, while the share of respondents who say they are concerned with losing their job fell to 16%.

The share of respondents who say their household income is significantly higher than it was 12 months ago fell to 24%, while those who say it is significantly lower fell to 12%.